17 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
During the reporting week, in the Azov market there has been observed an increase in business activity, which slightly pushed the rates up. This is mainly due to the upcoming long holidays in Russia. Shippers were trying to find vessels for the next dates and to make shipment before the holidays, amid hopes to get payment for the goods without any latency. Also, the market was influenced by the factor of increasing the goods nomenclature in the region, where there were new offers for shipment of pig iron and fertilizers, in addition to grain and coal. All of these things contributed to the growth of freight rates of USD 1-2.
Many market insiders are placing their stack on the fact that freight in the Caspian and Azov regions will seriously decline in the next two weeks. The key reason for this will be the long May holidays in Russia, during which the shippers would prefer to take a break and to go back to work in full force only from May the 13th. There are expected the overabundance of spot tonnage and subsequent reduction of rates.
The demand for the coastal fleet, which has been used to work for transshipment within recent years, remains pretty weak, therefore the tonnage employed on such voyages is looking for alternative work from the river. In this regard, many Charterers, made shipments from the ports of Volga, change carrying with direct conventional vessels of river-sea type for shipments with coasters to sea ports and further transshipment at Rostov or Astrakhan. On the average, this reduces the cost by 5 USD and at the same time does not allow the river market to grow, despite the full opening of navigation on inland waterways.
The new sanctions against Iran issued by the United States play an important role in the Caspian region. Shipments of many Charterers almost stopped, because there are no payments from Iranian importers for almost half a month, so the Merchants have to deliver the cargoes with large delays in payment, which at long last has a strong impact on working assets and does not allow them to buy new volumes. According to information from some Traders, this situation with the transfer of funds may change for the better in the first week of May, and then in the Caspian region is expected to increase the demand for the fleet and the growth of freight rates after the holidays, but so far it remains at the level of rumors.
Due to the lack of interesting cargo offers from the river to Iran many Owners consider transit cargo as an alternative from the Caspian Sea to the Mediterranean Sea. As a reminder, at the beginning of the navigation a fair amount of contracts were concluded for the export of lots of urea from Turkmenistan to the Black Sea, but today this flow is almost frozen due to problems with shipments at the new Turkmenian plant. Owners, moved out their fleet on the Caspian Sea with the express purpose of taking this cargo, are now in pitch, because part of the fleet is being cancelled, and there are no sufficient offers from the river and the Caspian Sea at the moment. Generally speaking, the increased number of fleet is weighing rates in the region down.